Chemring suffers lower profit on impairment, Sensors division weakness

(Alliance News) - Chemring Group PLC on Tuesday reported lower half-year profit due to an impairment charge and weakness in one of its two divisions, but the defence contractor confirmed its annual guidance, saying that more than 90% of expected revenue already is covered by a growing order book.

The Hampshire, England-based provider of technology products and services to the aerospace, defence and security markets increased its interim dividend in response to its positive outlook. It declared a 2.8 pence per share payout, up 4.0% from 2.7p a year before.

Chemring shares were down 4.9% to 485.40 pence early Tuesday in London. The wider FTSE 250 index was up 0.9%.

The company reported pretax profit of GBP18.8 million for the six months that ended April 30, down 27% from GBP25.9 million a year earlier, despite revenue rising 6.5% to GBP237.3 million from GBP222.8 million.

Exceptional costs totalled GBP8.8 million in the recent half, compared to just GBP2.4 million a year before. The most significant of these costs was a GBP6.7 million impairment charge for the retirement of Countermeasure operations in the US state of Tennessee.

Underlying operating profit was GBP24.5 million, down 7.5% from GBP26.5 million a year before, with a margin of 10.3%, narrowed from 11.9%. Chemring said the reduced profit margin was due to a weaker first half in its Sensors & Information division. Its other division, Countermeasures & Energetics, performed strongly, however.

Chemring said its total order book reached a record GBP1.40 billion at April 30, up 8% from a year before.

Trading in the first half was in line with expectations, and its full-year outlook is unchanged, the company said without detailing these. Chemring noted that 91% of expected 2026 revenue has either been delivered or was in the order book by the end of April.

Net debt rose to GBP144.5 million from GBP93.3 million a year ago as Chemring said it continues to invest in expanding its Energetics production capacity.

By Tom Waite, Alliance News editor

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